Bercy Lock: The Senate Adopts In First Reading Bill For Fighting Against Fraud

In the previous episode1, we presented the various proposals made in the report prepared by the parliamentary information commission on prosecution of tax offences.Restating some of these proposals, on last July 3, the Senate adopted in the first reading the bill for fighting against fraud2, thereby taking a first step toward a possible elimination of the "Bercy lock".

According to this bill, the tax authorities would now be required to file a complaint with the public prosecutor to begin prosecution if the facts they have examined in their audit satisfy the following two cumulative criteria:

- The adjusted taxes are subject to at least an 80% penalty [3] for an amount above a threshold set by decree in the French Council of State [4]; - Or (i) the taxpayer is subject to the obligation to file a declaration due to his duties or elective offices or has already been sanctioned for identical facts subject to at least an 80% penalty for two out of the last four years, or (ii) the facts are likely to be categorized as aggravated tax fraud [5]. Therefore, the Senate repeats the recommendation of the information commission on prosecution of tax offences, for whom introducing statutory criteria allows the tax authorities to objectively build up a set of cases the public prosecutor can prosecute.

However, the senators chose to establish cumulative criteria instead of alternative criteria, as the report proposed. As a reminder, the report proposed the following alternative criteria:(1) the adjusted taxes are above a certain threshold and are subject to a penalty showing the intent to avoid paying the taxes, (2) the case is categorized as aggravated tax fraud, independently of the amount avoided, and (3) the taxpayer is a repeat tax fraud offender.

As-is, this bill therefore requires the filing of a complaint with the public prosecutor if the criteria are satisfied, and, if they are not, it gives the tax authorities the discretion to refer the matter to the commission on tax offences ("CIF").

Moreover, the Senate proposes that the tax authorities nonetheless be able to consider, on grounds related to the given facts, that the complaint should not be filed even though the criteria are satisfied.However, they must so inform the competent public prosecutor, who, having the possibility of asking the tax authorities for information about the given facts, has the right to...